For more than 29 years, Service Industry News has served as the voice of the pool and spa service professional. A twice monthly newspaper, the staff covers featured stories on equipment installation, trouble-shooting and repair; water chemistry and business issues facing the industry; and news pertaining to the interests of the pool and spa technician.

In addition to the newspaper, we have produced three technical books used throughout the industry as training and reference guides. The Professional Pool Technicians' Guide to Chlorine, Guide to Alternative Sanitizers and the Guide to pH, Alkalinity, Water Testing and Water Balance are compiled from articles that originally appeared in our newspaper.

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An extraordinary man in an ordinary profession

What makes a company
profitable? In today’s economic climate this is a bit of a luxury question
given that nearly 14 million people in the United States are still unemployed.
When you add that to the 2013 tax increases, making a profit can be very difficult.

“At the core I’m a pool guy”

David Hawes of H & H Pools in Dublin, Calif., tells Service Industry News his story and the keys to his success in this one-on-one interview. His message is loud and clear, and may explain how an ordinary pool guy can turn his service business into a huge success.

Yet, visit any college
campus in the United States today and the number of students majoring in
business beats out all other disciplines. Do an online search for the top 10
degrees desired by employers and students, and confirm that accounting and finance
are number one on the list.

General information on how
to create a successful business and make a profit is everywhere — TV, online,
radio and even in the few bookstores that still remain. In fact, among the most
profitable college departments today are the business departments that
specialize in teaching leadership, management and yes, you guessed it, profit.

This edition of Service
Industry News joins the profit
conversation as it relates to the service side of the pool & spa industry.
Drawing from lessons in micro economics, weekly pool maintenance is not
profitable.

According to economic
theory, “economic profit” (which means making more money than is spent in
supplying a good or service) is not sustainable when an industry is perfectly
competitive.

Typically a perfectly
competitve industry is characterized by 5 key factors: low (less than $100
thousand) overhead costs, known as fixed costs; many competitors; few
regulatory hurdles such as licensing; a non-unique product or service; and very
little control, if any, over the price.

At the most basic level
and from simply a maintenance perspective, the service side of the pool &
spa industry matches closely with each of these factors.

Things are very different however, when the services expand beyond
maintenance and include repair and installation. These specialties or service
differentiation, raise the bar because knowing how to install a pump or install
automation is not something the average pool guy neccessarily knows how to do.
If he does offer these services in addition to basic maintenance, the number of
companies he competes against will be fewer. And if the number of suppliers he
competes against changes, along with several other variables, then it is
possible that he has evolved out of perfect competition where profit does not
exist.

How then, can a pool &
spa service technician leave perfect competition and make sustainable profits
that go beyond simply breaking even? In other words what can a service tech do
to profit?

To answer this important
question, we decided to interview a very successful pool guy to learn what he
did to leave the perfectly competitve pool & spa industry where he now
enjoys sustainable profits.

In the pages that follow
we share with you what he said.

David Hawes of H&H Pools in Dublin, Calif., operates a pool &
spa service 30 miles from Oakland, Calif.

His operation employs a
crew of 10, along with a fleet of 11-trucks, used to service 650 pools within a
30-mile radius, 5 days a week. Profit margins before taxes for
companies of this size (500+ accounts) are usually in the 10–15 percent range. Hawes’ services include: weekly maintenance; repairs
on equipment; upgrade features; cleaners; safety equipment; water testing;
lights & electrical; pumps &
filters; energy audits. The company’s average monthly charge for once per week
complete service, including chemicals, ranges from $130 to $150.

By comparison, according
to the 2012 June 30 survey edition of Service Industry News, Northern California service professionals charge an
average of $85 per month for weekly service. On average, most maintain 50 pools
per week and employ a staff of two. These numbers account for regular service
and not installation or repair.

Why are you successful?

In the seminars I give at trade shows, I
always answer that by saying hard work, dedication and concern for my clients.

But, at the end of any given day, my wife has gotten mad
at me for leaving at ten-o’clock at night to fix a client’s heater. To my wife
I say, You haven’t experienced planning for a big party and then not having
your heater work, and how frustrating that can be.

But it’s a lot of hard work. It takes a lot to run a
business.

I also try very hard to stay educated and on the cutting
edge. In thinking about the successes I have enjoyed it hasn’t been all about
increasing sales, but improving my knowledge. Executing in many areas is
important and has allowed me to learn more by making more mistakes.

Also when I am learning, I am networking. I put myself out
there. I was not a wallflower, and over the years I relied heavily on
networking and the social aspect of business. It really helps to know the right
people when you’re in trouble.

Now even though I feel like an old guy and I don’t clean
pools anymore, I could do a route tomorrow because it’s not beneath me. At the
core I am a pool guy, but I have to organize my time to direct the ship.

If you were to make some
suggestions to new pool guys, what would you say?

I have mentored quite a few and essentially I tell them
not to try and grow faster than they can handle.

More should consider staying a one-man operation and
educating themselves in financials and accounting. It seems obvious but
understanding business is often forgotten.

It is very important to watch the money, and stay on top
of the cash flow and be conservative.

This also means that planning for all things financial
should happen right away and often. Planning for taxes and retirement should
occur all of the time.

I saw the end of my
career at the beginning of it. Many guys just see the checks coming in and
forget to plan. They overspend on things they shouldn’t and under spend on
things they should.

A key to a great business is one that has financial
security and allows an owner to take time off.
In this business you can be as big as you want, but it takes hard work
and dedication. In my heyday I had 900 pools on route. But young service guys
today just want to big right now. Don’t go big too fast.

What has been the hardest part of growing your
business?

Juggling all the balls in the air; I’m a dad, husband,
owner, human resource manager, marketing manager and book keeper. But the most
important and most challenging aspect of the business are the employees.

Some people just shouldn’t be bosses. Being a boss is not
like the military. Bosses should not be asking their employees to jump hoping
for the ‘how high’ answer.

Being a boss is about establishing relationships with
people. A lot goes into it too. People
have different personalities, different baggage, different needs and wants.
It’s hard to keep people happy and motivated and know how much to pay them and
how to retain them.

How big is your business
and how long did it take you to get where you are today?

20 years. I really started as a 12-year old kid. My
company was called Dave’s Chemical Service. I would ride my bicycle to people’s
pools and add chemicals. I had an early vision of what I wanted. The vision
changes everyday and so contingency plans are very important.

I am probably in the top 5-to-10 percent in terms of size.
At one time I had 900 pools and two companies. I sold my Newark, Calif.
operation over ten-years ago to my employees.

Is your competition friend or foe?

Friend. Networking is key and you cannot be an island to
be successful in this business.

Guys need to network with manufacturers, suppliers and
other pool guys; it is very important because at some point you will need them.
How willing will these people be to help you if they don’t even know who you
are?

As far as other service technicians, I’ve turned away many
potential clients. I might go to a pool and check it out, but if I see that the
pool looks good and the equipment looks well maintained and even better, if I
see a service card in the box, then I will tell the client to work it out with
their current service company.

I looked at one lady’s pool and after I saw that her
service company was doing a good job, I told her that I wouldn’t be able to
take her on as a customer. She followed me all the way out to my truck asking
for a price. I wouldn’t give her one. It’s an integrity thing.

If the customer can’t get along with their current service
company, then they probably can’t get along with me.

How did you obtain your customers?

By hard work and then word of mouth. It’s
a cliché but it’s true. Do a good job. People’s expectations are so low today
that all it usually takes is to commit to doing what you said you would do. It
seems to amaze people. Another integrity thing. Gradually 50 clients will turn
into 100.

I have 650 people working for me by word of mouth. Forget
about marketing programs and advertising. Well no — don’t forget about it — but
to start, it is all about providing a good service.

The magic pill is to do things the way they should be
done: responsibly and ethically. I start my day at 6:45 in the morning with
paperwork. I’m in the field in the afternoon, and when I get back to the office
I do the paperwork from those visits. I usually work around 80-hours a week: that’s
about 13-hours a day.

How do you retain your customers?

When
I was first establishing my commercial property management accounts, I had
about 100 at one time.

I would take just 10 minutes out of my day to stop in and
say “hi.” You know meet and greet. I would carry around a nice change of
clothes in my truck, stop off at a bathroom somewhere and change so that I
looked nice. Then I would go into their offices and just chat, mostly asking if there was anything that we needed
to be doing different or better?

You have to give it a personal touch and put your face in
front.

My oldest service guy, who has worked for me for 15-years,
has had zero complaints from his clients. He tells us at our company meetings
that he’ll often just stop off at a client’s house and say “hi” and ask if
there is anything he can do to improve his service? His customers love him. He
is doing his job and building good relationships.

He obtained several of his customers just because they saw
his truck at their neighbors house every week, on the same day and at the same
time.

I have heard lots of guys say that they don’t ever want to
see the client. They just want to get in and get out and hope they won’t see
the customer. They see the client coming and they see a complaint coming. You
just have to turn it around: when I see a client, I see an opportunity to do a
better job.

It’s about the LTR’s — long term relationships. I have had
some clients for 25 years. My very first clients are still on service and I’ve
been to some of their weddings and birthdays. I’ve even been around long enough
to see some of their dogs die.

With my clients it’s all about the little things.
Sometimes I’ll still stop in to see a client just to say “hi.” Then they tell
their friends that the owner of their pool service company still stops in to
see them from time to time.

This kind of thing is going to become even more important
as customers turn more and more to the internet to find service guys. Very few
of my clients would consider “shopping me” online just because of the
relationship we have established.

What techniques of others
have held your attention?

At 30 I would have cared about how to get profitable clients,
but now at 54, I listen to where they are vacationing and what kind of
retirement plans they have made for themselves.

I also pay attention to what processes they have in place
that allow them to step away. I care about what kind of exit strategy they have
and whether or not they have considered the end of the game.

For myself, I have put my employees in a place where they
are the people our clients want to talk to. In some cases I am the guy that
goes to take a look at a customer’s pool and they don’t even know that I am the
owner. When I mentor a new pool guy I
focus on how important it is to plan for retirement.

Have the 2013 taxes had an
impact on your business?

Yes a very strong impact. We have been gearing up for the
different scenarios for the past 6 months. This is not the kind of thing that
you can start to think about on April 15th.

It’s important to keep looking at financials even without
the fiscal cliff. It’s strange because we perform a service and want to be paid
to do it but some of us don’t want to consult with a CPA for their services
that are very important.

Reviewing revenue streams and constantly monitoring
material costs and what needs to change is a daily process. Since September of
2012, we have been reviewing our material prices, vehicle costs, employee
needs, prices and all sorts of financial variables. We have not looked at
decreasing any particular expense with the new taxes, but we are constantly
looking at all expenses for ways to make reductions. Budgeting for the year involves
looking for early buy incentives, constant route monitoring for the least
amount of overlap, and revenue growth through additional services. I think the
new fiscal picture for 2013 is going to force all of us to take a more serious
look at our financial picture, but again, this is not just because of the
fiscal cliff.

Are there any regulatory actions that you think are unnecessary?

I think that there is some merit in all of the regulation
that this industry has passed. For me, the frustration with regulation is not
the regulation, but the lack of enforcement and the big cloud of ambiguity.

Take the California’s Contractors License for example: In
California this regulation is very cut and dry. I have had my license for 25
years, but I’ve had to compete against
people who don’t have theirs. Who is enforcing the regulation and how is it
being enforced? And then, is it enforced consistently? That’s what is
frustrating.

And basically there are no excuses for not having the
license in the first place. It’s about respect. If you don’t have one, get one!

This gets even more frustrating when you get called out to
fix something that doesn’t work because it was installed wrong by someone
without a license. Enforcement is a big fat question mark.

And it’s not just about enforcement either because the
regulations are also ambiguous. Something as simple as rules about drain
covers; some cities enforce, some don’t; some inspectors enforce, some don’t.
And then on top of it, there are the differences between state and federal
rules.

What business model do you follow?

Return your phone calls! Establish what you are responsible for and just
do what you say you’re going to do. That’s it. That really is the magic answer.
We are not 100 percent all of the time, but today people are so surprised by
good service, that when you answer an email on the same day you get it, people
are going to love it!